China’s Big Week of Change and Trump’s Return
Greetings from Shanghai:
Sometimes, years go by quietly, and then everything happens at once. This week, China witnessed significant developments that could shape its future—and the world’s.
A Boost for China’s Economy
On Friday, the Chinese government announced a massive stimulus plan to ease the debt burden of local governments, which have been struggling to provide basic services. The 10 trillion yuan ($1.4 trillion) program aims to allow local governments to refinance debt over the next few years, freeing up resources for growth and development. Finance Minister Lan Fo’an detailed a 6 trillion yuan debt cap and an additional 4 trillion yuan quota in special local bonds, hoping to cut down China’s “hidden debt” and revive its economy.
While ambitious, this plan only accounts for about 0.5% of China’s GDP over five years, leaving some economists underwhelmed. Nevertheless, the initiative is China’s attempt to stimulate growth in an economy facing post-COVID challenges and a real estate crisis. For now, the goal seems to be stabilizing rather than significantly expanding the economy.
Trump’s Re-election: What It Means for China
Meanwhile, across the Pacific, Donald Trump has been re-elected as U.S. president, sparking discussions in China about how this could impact their approach to diplomacy and economic policy.
Chinese scholars and media are closely analyzing the shifts in U.S. political preferences, noting how Trump’s support among certain minority groups has reshaped American politics. While the general Chinese public might not be particularly interested in U.S. elections, experts see Trump's return as a potentially mixed bag for China. On one hand, his unpredictability is a challenge; on the other, his friction with U.S. allies could give China an opening.
Chinese Views on U.S. Politics
Interestingly, many Chinese on social media show a preference for Trump’s conservative policies, which they feel align with traditional Chinese values, such as skepticism towards multiculturalism and a preference for limited government control over the economy. At the same time, some Chinese observers appreciate the Democrats' support for Ukraine, viewing it as a stand for justice.
Two Potential Paths for Trump
Chinese social media users speculate that Trump’s second term could go one of two ways: either he doubles down on his policies without restraint, or he seeks to leave a more positive legacy. If Trump adopts the latter approach, it may even benefit U.S.-China relations, at least compared to his first term.
A Strategic Opportunity?
For China, Trump’s return may not be entirely negative. His complex relationship with allies like Taiwan could weaken U.S. alliances in Asia, giving China more room to maneuver. While China remains wary of Trump’s unpredictability, it is prepared to respond with its own strategic measures, potentially in areas like trade tariffs and tech sanctions.
Keeping an Eye on Pompeo
One crucial factor will be Trump’s potential appointment of former Secretary of State Mike Pompeo, who China previously sanctioned and labeled a “public enemy of mankind.” Should Pompeo return to a major role, China-U.S. relations may face even greater obstacles.
From here in Shanghai, we're keeping our fingers crossed and watching these developments closely.
- Alexander Glos